How to buy a business and not be disappointed
Property prices and those for established businesses fall by 20 percent in Belarus, as sellers become more compliant
It’s challenging, and risky, to create a new business from scratch, inspiring many to purchase an established concern. Belarusians are no exception, and a new database is here to help, listing small online shops and, even, large hotel complexes. It features no less than 300 businesses, and is updated daily, detailing cafes, restaurants, shops, hair salons, car-care centres, small-scale manufacturing enterprises and many others for sale.
Supply prevails over demand, leading to a 20 percent price fall of late. In fact, owners tend to overestimate the value of their business, notes Sales Manager Stepan Gusak. He tells us that value estimations can vary widely. “For example, a factory making rotary-cut veneer and plywood, based in the Gomel Region’s Vasilevichi, was for sale for a long time at $400,000. After two years, a foreign firm bought the enterprise for just $100,000. The price is always negotiable.”
A bar or cafe in the centre of Minsk can be bought for between $100,000 and $300,000, depending on its size and location, equipment included, lease contract, and current interest rates. The service sphere has a wealth of attractive propositions.
Experts recommend ignoring sellers’ initial price requests and to avoid taking their profit projections at face value. A cafe on sale for $298,000 might come with a declaration of monthly profits of $8,000, making it appear that the cafe would pay for itself within three years. However, it’s best to examine the accounts carefully, and gain expert guidance, from someone experienced in public catering. Forecasts should take into account not only location but the number of seats available and the stream of customers.
Before concluding a deal, buyers should ask if they might participate in the business for some time, to see its strengths and weaknesses, suggests Mr. Gusak. “You should also seek guidance from professional lawyers, auditors, bookkeepers and brokers, asking them to make a professional analysis of the business which you would like to buy.”
As a rule, enterprises are ‘sold’ with accompanying personnel, whose expertise is often vital. Resignation of key figures can lead to the collapse of a business. In fact, many businessmen create businesses purely with the idea of selling them once they reach the stage of making a profit. Mr. Gusak tells us of a client who created and then sold a business dealing in cargo transportation. He later opened an advertising agency and then, a few years later, switched direction again. His secret was in feeling confident in each sphere.
Most (80 percent) of all enterprises bought by Belarusians cost no more than $50,000: those more expensive tend to be purchased by foreign investors. Among the major sites currently for sale are: three ‘chain’ grocery shops in Minsk, priced at $1 million; an estate on Braslav Lakes, valued at $2.2 million (including not only a large amount of land but various wooden buildings and all necessary infrastructure); and an industrial base with hotel complex, priced at $15 million.
Interesting projects are on offer in the IT sphere, with buyers able to purchase a successful domain name, good digital products and advertising contracts for just $1,000 to $3,000; such a business can pay for itself within a year, or even two months.
“The cheapest I recall was an online shop selling flowers, priced at just $500,” notes Mr. Gusak. “Some cost up to $50,000, but there is one at the moment selling building materials (priced at $5,000), an online shop selling furniture ($4,000) and one selling household goods (costing $1,500).
Meanwhile, the snackbar at one bus terminal is on offer for $35,000; the airsoft club is priced at a mere $8,000.
If you have money and don’t want to risk investing in a start-up, why not buy an operational business and develop it further.
By Svetlana Devyatkova